Note: This is a guest post from Darren Herman, chief digital media officer of The Media Kitchen and managing partner, KBS+ Ventures. Herman is an early investor in Yieldbot and Crowdtwist through KBS+ Ventures.

Dear Marissa,

As a Yahoo shareholder, an original user of David and Jerry's Guide to the World Wide Web, and someone who wants to see your company succeed for no better reason than being part of the industry when you launched in 1995, I thought I'd write an open letter and add my two cents around your marketing and advertising technology strategy that is being talked about in recent analyst coverage surrounding your Q3 results.

Before I begin, I want to applaud your hiring of Henrique De Castro. He has a storied background in this space and I'm sure he is going to steer the ship in the right direction. With that said, take my writing with a grain of salt as Henrique is paid much more than I am to think.

The below is based on conversations with our advertising clients (Chief Marketing Officers), our staff (The Media Kitchen "chefs"), and our collective management vision of where we think the industry is going. In addition, I run the marketing & advertising technology investment arm of our firm and have met with many entrepreneurs in our space. A deeper look into this is referenced in a report we issue each year called The Menu which can be found online at Slideshare.

Making Money Overnight

You have mentioned you want to make money overnight on Yahoo. This comes from automation, data, and algorithms though purely set-it-and-forget-it systems will not work. Humans need to service the business, no matter what performance it drives and this is something that Google is realizing as Madison Avenue has gotten frustrated with them on their service levels. One of the low hanging fruit areas for you to explore is a partnership with one of our portfolio companies, Yieldbot.

This Massachusetts- and New York-based team has built an intent engine (and patented the Intent Graph) that helps trigger display and video advertising units (really, any units) based on intent triggers (such as organic keyword search). Since Yahoo! is looking to explore ways of making advertising inventory more targeted and available to the masses, such as what you did with Google Adwords, you should consider looking at this organization.

Intent data works extremely well in advertising, especially when most media plans reward partners who have higher levels of Intent. Your background here is not trivial. You spent your time helping building a$200 billion-plus organization that harvests and delivers advertising based on Intent.

While much of this intent is captured in paid search (SEM), you have the ability of leveraging this now in display which could be a growth driving business as display has the ability to deliver brand messages as well, as, response driven calls to action. You are going to have a lot of competition in the coming years from Amazon and Google in this space but it is still an open game to be competitive in.

It's certainly not time to back away or call quits. Your online footprint is massive and will continue to grow, so the intent triggers that are leading to your pages are a data asset that Wall Street would love to bake into your market capitalization.

Single Auth Across Devices

As mentioned above, your online footprint is massive. This is a fact. You've acquired and built your O&O presence and have the ability to leverage a single user authorization across the online footprint. I'mstressing this is because of privacy conversations in the government and trade bodies currently that might (or might not) impact the way we as marketers and publishers use cookies to recognize users. Your singleauthorization across your presence would theoretically remove you from the cookie game and make your platform even greater from a data perspective because you can accurately identify your users.

As Yahoo! considers its moves across multiple screens and other platforms, the single authorization will help drive marketers and advertisers unfulfilled thirst for answering the age old question, is it working and am I reaching the right audience?

One of the companies you should look into here is a KBS+ Ventures portfolio company called Crowdtwist. This New York City based team, former alumni of TechStars NYC, has created a platform that requires users to authorize and then helps track a multitude of data points in exchange for some form of value (such as points, gifts, etc).

Assuming that Yahoo! could roll this out across it's entire footprint, authorize/credentialize users into the Crowdtwist user table, it could start learning a lot more about the social nature of its users and help drive additional advertising dollars because of increased visibility (better targeted) and additional advertising units to sell (awards, perks, etc). There is a partnership in the making between Yahoo! and Crowdtwist and it makes a ton of sense, IMHO, to explore. Media + Social or Paid + Earned is likely to get on most media plans on Madison Avenue.

Why A DSP?

Rumors have circulated that you want to acquire a demand-side platforum such as Turn or Rubicon Project, which is both a demand- and supply-side platform. While I have not seen their financials myself, I have heard rumors that they are pushing some serious revenue through the platforms. I'm sure that this revenue would be nice to have on Yahoo's books. In 2008, I would have said, "buy" but in 2012, I question the acquisition of a desktop-based demand-side platform.

Let me explain why. In 2008, I started Madison Avenue's first trading desk, Varick Media Management (VMM) with my partner, Barry Lowenthal (@barryl530). The two of us saw the future of media buying, shifting from faxes and lag-time to algorithmic and real-time. We had a traditional media agency to protect, with real revenue, so we spun VMM out of The Media Kitchen and kept it at arms length, with a different P&L and different management. Today, we sit on the board of VMM but are not overly active in the day to day management of the business. We still continue to think it's the future of the media buying business.

DSPs in the early days had the technical talent, the vision, and the relationships with the sources that matter: the advertising exchanges, the data partners, and the recruiters for Wall Street-like talent. Today,4 years later, this barrier to entry has whittled down a bit and the value proposition that most DSPs bring Madison Avenue are reduced to the last mile: pipes. Similar to the telecom industry, the last mile is what ismost valuable to a firm.

The pipes for DSPs are most valuable, and specifically, the maze of pipes to multiple public/private exchanges, data partners and the like are where we place most value. A colleague of mine calls the DSPs basically "bid technologies" and most of the "brains" of the DSPs have transitioned from the DSP to the trading desk or agency who are using them.

I do not know why you'd need a DSP. Maybe because it's cheaper than building your own pipes. I can understand that and if that's the case, then write that check. But did you not get those pipes with youracquisition of Interclick, now known as Genome inside your organization? Instead of purchasing a desktop-based DSP such as Turn or Rubicon, why not examine the dozens of of mobile DSPs that have popped up over the past 12 months. There are plenty that have gotten some initial traction and being that every report that Henry Blodget, Mary Meeker, or any other industry smart person has written has mobile at the future. Why not go and acquire the mobile exchange portion of the Luma Landscape?

In Closing

Yahoo! is a brand that many of us want to see succeed, which is why I spent a large part of my morning while flying across the USA to write this post. I could have been doing many, many other things. We have a ton of respect for you, Marissa, and want to see you succeed in this role. I hopefully provided some context and color to some areas that are quick wins for you that I'd love to elaborate further if given the chance.

Disclaimer: Crowdtwist and Yieldbot do not endorse this post nor know that it was being written.